Responding to Social Media Boosts a Company’s Bottom Line, New Research Finds

March 19, 2015

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Medallia study finds that hotels that respond to social media reviews grow occupancy rates faster than social media laggards

PALO ALTO, CALIF., March 19, 2015 — Hotel properties that actively engage with social media reviews grow occupancy at double the rate of properties that don’t, according to a study released today by Medallia (www.medallia.com), the global Customer Experience Management (CEM) leader. The study examines customer and business data from over 4400 hotel properties worldwide to understand and quantify the impact of social media engagement on a company’s revenue growth, customer satisfaction and social reputation.

Results Overview

The study found a direct relationship between responsiveness to social media reviews and occupancy rate. Properties that responded to over 50 percent of social reviews grew occupancy rates by 6.4 percentage points, more than twice the rate of properties that largely ignored social media reviews. These socially engaged properties also outperformed the hospitality industry as a whole, which achieved a 4.3 percent occupancy growth rate during the same period.

“The hospitality industry has experienced the impact social media can have on their business, both positive and negative, but these findings allow properties to quantify the impact of taking action on reviews — and make it easier to justify additional investments in social media engagement,” said Aurelia Setton, Medallia’s General Manager for Hospitality.

Regardless of the total percentage of reviews a hotel had responded to previously, even a small increase in the proportion of reviews a hotel responded to resulted in an increase in occupancy rate. The properties that increased their responsiveness by over 50 percent earned double the occupancy rate growth of those that didn’t improve their responsiveness:

50%+ increase: 6.8 percentage points of occupancy rate growth

30-50% increase: 3.7 percentage point growth

10-30% increase: 2.2 percentage point growth

1-10% increase: 3.2 percentage point growth

High responsiveness does not just impact occupancy rate, either. A commitment to social media engagement was found to drive similar gains in overall customer satisfaction. Properties that responded to over 50 percent of social reviews saw their Net Promoter Scores® (NPS) increase by an average of 1.4 points — while all properties with less than 50 percent responsiveness saw their scores decrease:

50%+ response rate: 1.4 point NPS growth

30-50% response rate: 0.3-point decrease

10-30% response rate: 1.5-point decrease

1-10% response rate: 1.7-point decrease

“One notable aspect of these findings is that the responses are taking place at the property level,” said Michael Morton, Best Westerns’ Vice President of Member Services. ”Hotels already trust their frontline with in-person customer interactions, and this research shows that letting employees engage with customers online as well — armed with their first-hand knowledge of specific customer experiences — pays real dividends.”

Additional Findings

The speed with which properties respond to customer feedback also has a significant impact on their occupancy rate. Properties that responded to feedback in less than a day on average had average occupancy rates 12.8 percent higher than properties taking longer than two days.

Responded within a day: 52.3% average occupancy rate

Responded in 1-2 days: 49.3% occupancy rate

Responded in over two days: 39.5% occupancy rate

Hotels with the highest responsiveness to social media outperform competitors in their overall social reputation. Properties that responded to over 50 percent of social reviews had social scores an average of five points higher than competing properties.

50%+ response rate: 4.9 point advantage over competitors

30-50% response rate: 2.7 point advantage

10-30% response rate: 1.2 point advantage

1-10% response rate: 1.2 point advantage

“Companies often use social media primarily to raise awareness about their brand, but these findings show that social engagement can also drive organizational learning and increase accountability about meeting customer needs,” said Dorian Stone, Medallia’s Vice President of Customer Experience Strategy. “Engaging thoroughly and promptly with all kinds of customer feedback shows frontline employees what they need to do to deliver better experiences — and when social media is utilized in that spirit, the gains are significant.”

Research Methodology

The study examined customer and business data from over 4400 independently- owned Best Western properties, including approximately 2300 in the US & Canada and approximately 2100 across the rest of the world. Results are based on multiple regression analyses and cover the period from April 2013 to September of 2014. Occupancy rates were estimated based on the total number of survey invitations sent per quarter, the average number of nights per stay, the property’s (current) number of rooms and the number of days in the quarter.

About Medallia

Medallia® is the Customer Experience Management company that is trusted by hundreds of the world’s leading brands, including Airbnb, CA Technologies, Four Seasons, GE, Macy’s, Marriott International, Nordstrom, Sephora, Shell, The LEGO Group, and Zurich Insurance. Medallia’s Software-as-a-Service (SaaS) application enables companies to capture customer feedback everywhere the customer is (web, social, mobile, and contact center channels), understand it in real time, and deliver insights and action everywhere—from the C-suite to the frontline—to improve the customer experience. Founded in 2001, Medallia has offices in Silicon Valley, New York, London, Paris, Australia and Argentina. Learn more at www.Medallia.com.